The S&P 500 (SPY) dropped by 1.22% at 11.44am today. Deutsche Bank's Bankhim Chadha sees more downside ahead, pointing out that investor allocations to stocks haven't hit true bottoming levels yet. Meanwhile, Morgan Stanley's Mike Wilson sees a possible tradable rally but isn't betting on new record highs unless growth headwinds ease or the Fed signals rate cuts. The bigger concern? Trump's tariff policies, which are fueling economic uncertainty, and the AI boom, which some fear may not deliver on sky-high expectations.

Tech stocks have been hit the hardest. Tesla (NASDAQ:TSLA) slumped 3.85% at 11.46am, extending its steep decline from December's peak, while Nvidia (NASDAQ:NVDA) shed another 2.2%. The Nasdaq Composite (NASDAQ:QQQ) gave up Monday's gains as investors pulled back from high-risk bets. A Bank of America survey just recorded the largest-ever cut in US equity allocations, reflecting deep anxiety over trade policy and inflation. Business sentiment isn't faring much betterNew York Fed data shows worsening conditions, with hiring slowing and input costs rising at the fastest pace in two years. And while February's industrial production numbers surprised to the upside, analysts warn the real impact of Trump's tariffs has yet to kick in.

So where do markets go from here? All eyes are on the Federal Reserve's next move. A dovish pivot could ease the pain, but if tariffs stay put and the economy weakens further, the S&P 500 could still have room to fallpotentially down another 7% to 5,250, according to Deutsche Bank. On the flip side, if political uncertainty clears up and earnings stay strong, some strategists see an eventual push to 7,000. For now, investors are stuck in limbo, weighing short-term pain against the potential for a bigger rebound ahead.